Tag Archives: culture

By Eric A Denniston, Managing Director, Denner Group International 11-18-2011

Takeaways: Systems Thinking is an excellent tool to stay ahead of changes in the world around us. Understanding and applying it in organizations improves communication, reduces unintended consequences, and changes the internal culture.

What is Systems Thinking and why should it be important to ALL business people? The easy answer is that it’s the way the natural world works. The more difficult answer is that it means looking at organizations as living systems existing within a universe of nested systems. In the USA we have deliberately been educating ourselves and others to focus almost exclusively on analytic or tactical thinking. This has been to the detriment of using or building our abilities to think strategically, which is, in fact, thinking systemically.

The answer to WHY it should be important to any of us is that in our environment of increasingly rapid change, we absolutely must have long-term strategies that keep us focused on long-term outcomes and that also permit and support us in making the tactical adjustments to stay on track. In essence, this means managing a business with strategic intent and operational flexibility. Sounds straightforward right? It really is, but it does take some skill, and more importantly some discipline, in applying strategic and tactical thinking correctly to address and solve problems.

This does not mean we have to change how we think about everything all the time. It means we need to learn and practice thinking strategically and systemically, and know how and when to do so.

Having formed or altered our culture to make it unimportant to think strategically, we have only begun to learn how to think this way to enhance our business management over the past 60 years or so. Management thought leaders agree that only during the last 20 years has Systems Thinking begun to be acknowledged as one of the most important skills that managers and leaders at all levels of an organization must master. Not as a panacea, nor to replace analytic thinking, but to know when to use each type of thinking and how to leverage them in the workplace.

This may sound like a high-level, academic topic that is overkill for small businesses or workgroup teams, but I’m going to illustrate how and why the opposite is true. The skill-set to practice Systems Thinking in the workplace is relatively simple, and the learning curve quite short. The key to making it pay off is the more difficult piece of clearly understanding that it implies a culture shift in your organization at the individual level to accommodate this type of thinking.

Natural Sciences Led Systems thinking Development

Let’s first take a look at where this discipline comes from. The natural sciences essentially led the development of applying Systems Thinking to solving their work problems. In human medicine, a few centuries ago, people began to recognize that all of our bodily systems are interconnected. When one system is affected, most or all the others are also somehow affected.

This is simply common sense to us today, but even this was largely misunderstood until the mid 1900’s. Recognition that organizations are also living systems made up of people who are living systems, and that they are also subject to the natural laws of life and therefore should be dealt with in that context, actually began in the mid-1900’s.

Today, associations around the world are devoted to the science of systems thinking. Educational institutions are embracing the skill sets from this discipline for the purpose of improving management techniques of all types of organizations. Of greater significance to business people, is that major corporations, non-profits and governmental entities have proven the worth of Systems Thinking in management. Moreover, they have enjoyed impressive success as a result of embracing Systems Thinking skill sets, generally outperforming their counterparts. Want some examples? General Electric is one. WD-40 is another much smaller company. Southwest Airlines is another. Sundt Construction of Arizona is another. The National City Police Department in California is another, notably a small city’s governmental department. I mention these to illustrate that Systems Thinking can be applied by any type or size organization.

So what? So this! Every business faces the common challenge of having not just good, but really great, communication among and between all levels of management. If you run a small auto shop, a 30-person professional services business, a medium size retail operation, lead a team of bankers, are a superintendent of a school district or lead a global manufacturing firm, you surely have to ensure your staff, teams and managers are constantly and clearly communicating with each other and with you to be confident your customers receive consistent high value. How will Systems Thinking skills help make this happen?

A Little Bit of Theory

With an understanding of just a little bit of the theory behind Systems Thinking and some brief instruction on skill-building, owners, managers and employees can gain a clearer understanding of how they can easily and much more effectively communicate problems and solutions within the organization. What you get is much faster decision-making that is also more likely to be better decision-making. A key element of Systems Thinking skills is that everyone in your organization can more clearly see his or her contribution to keeping the customer happy and coming back for more business.

Let’s get back to the how. If your firm has managers meeting regularly with top executives, not only do stronger personal relationships occur, but their ability to more comfortably and clearly communicate problems and discuss solutions is improved. If you add to this a common understanding of the various systems in the organization and those surrounding the organization, the wealth of intellect driving decision making is enhanced exponentially.

This can be accomplished by either having external facilitators conduct periodic scans of the internal and external systems of the organization or having an internal facilitator do the same. There are pluses and minuses to external and internal facilitators but that’s a topic for another article. This is an application of Systems Thinking that can be simply and easily practiced in the workplace at a low cost. No theory, just do it, and do it regularly. You might be astonished at the results you get.

For a more in-depth understanding of applying Systems Thinking in the workplace you might like to take a stab at the MIT Beer Game Exercise (http://supplychain.mit.edu/games/beer-game). It is commented on by Peter Senge in his book, The Fifth Discipline (pp 47-54), if you wish to understand its significance in how easy it is to overlook external factors affecting our businesses.

For simple tools to assist you in practicing the fundamentals of Systems Thinking in managing a business of any size, visit our website or contact me at your convenience. I can be reached at eric[at]dennergroup.com.

let people use their brains.
you’ll be amazed at the ideas they’ll generate to cut waste.

This is a tip in the book Lead with LUV by Ken Blanchard (One Minute Manager series author) and Colleen Barrett, CEO Emeritus of Southwest Airlines. Southwest embodies the philosophy of “take care of your employees and they will take care of your customers. It’s spread throughout the culture of the organization and has helped them generate profits despite downturns in the economy. They proved that it is possible to cut costs without cutting jobs.

As every other organization has had to do, Southwest had to take a look at costs in order to eliminate waste. They did this without eliminating jobs by soliciting ideas from their nearly 35,000 employees, turning to their staff as business partners.

One flight attendant suggested they remove the Southwest logo from their trash bags, saving the company $100,000. A simple, yet substantial idea. During Desert Storm when fuel costs were so expensive, a group of employees created a program called Fuel from the Heart, where employees could sign up to designate a certain amount of money to be withdrawn from their paychecks to help cover the cost of fuel.

The book, Lead with LUV by Ken Blanchard (Blanchard Group) and Colleen Barrett (retired CEO of Southwest Airlines) is also about Servant Leadership and what it means – keeping your focus on your customers and your employees first as the path to creating a great company.

One of the quotes I especially like in the book is “Leadership is about going somewhere – if you and your people don’t know where you’re going, your leadership doesn’t matter.” Even if everyone does know and understand where the company is headed, making it happen is another thing altogether. That’s operational leadership, according to Barrett.

“This is the servant part of Servant Leadership,” she says. “It’s what leaders focus on after everyone is clear on where they are going. It includes policies, procedures, systems, and leader behaviors that cascade from senior management to front line employees and make it possible for the organization to live according to its vision and values and accomplish short term goals and initiatives.”

In a nutshell, she says “treat your people right, and good things will happen.” It certainly has worked for Southwest Airlines. Founded by Herb Kelleher and later run by Colleen Barrett as President, Southwest has continued to succeed while other competitors have and are experiencing difficulties.

A Two-day exercise is all it takes

How does a company implement a cost cutting process similar to Southwest’s approach? One way is through a facilitated two-day exercise that focuses on cutting costs, not jobs. We take a cross section of your staff from all departments and levels and take them through a series of brainstorming exercises to identify ways they can individually and jointly cut waste. Then they crunch the numbers to determine what the cost savings might be, and present their ideas to the CEO and Executive Team for approval to move forward. The Executive Team makes an on-the spot decision- either a thumbs up or a thumbs down – or asks for more information.

Clients we’ve taken through this process have found an average of $1.5 million in ongoing annual cost savings, without eliminating jobs or investing in any new equipment or technology. The industry doesn’t matter. Giving your people permission to use their brains is the key.

Click here if you’d like to learn more about how to implement this at your company. Or call Eric Denniston at 858-357-9600 extension 4 or email him at eric[at]dennergroup.com.